The internet loves cats. How could it not with all the YouTube videos of cats? So we are going to invest in cats. Well, the shorthand name and stock symbol of the company is Cat. Its full name is Caterpillar. When caterpillar get big, they turn into cats, right? We just did some fact checking, it turns out caterpillars turn into butterflies. Close enough.
With some more research, it seems that Caterpillar (CAT) does not make cats, caterpillars, or butterfly’s as a business model. They make construction and mining equipment. Who wants to see furry construction equipment? I would not like to change that litter box. That is a job for Mike Rowe with Dirty Jobs. Anyway, my investment thesis is out the window with investing in cats.
Ok, on a more serious note, Caterpillar (CAT) is the best in breed in manufacturing heavy mining and construction equipment. Right now, the stock price is down with commodities being down with everything happening in the world. We have a belief that best in breed will find a way to improve itself. When prices go back up, they will be in the best position to benefit from it. We do not have an opinion on when commodities will get better. It could be this year, next year, or whenever. We plan on holding the stock for a very long time. We would like to ride the mining wave, at the cheaper stock price.
When times were good, Caterpillar (CAT) was selling for $115 at its 10 year high. Buying it at $64 is a 44% discount. Caterpillar (CAT) is a cyclical stock, and I would much rather buy it when it is cheap than expensive. A cyclical company is a company that goes up and down with the general economy. This happens over and over again. While it is possible to trade the ups and downs, we just want to be owners of great businesses for a long time. Buying this company when times are a little tough will be great when times become good again, and bad again, and then good again. We could wait to buy this when times become good again, but then we might have to pay over $100 per share.
We invested $261.07 in 4 shares of Caterpillar (CAT), including that cat-tastic commission we pay. We will earn $12.32 in dividends to start. With our starting rough times, we do not expect an increase in the short-term. However, over the long-term, we expect great things to come. We believe that one day again, this stock will be The Cat’s Pajamas.